Although currency bears pushed EUR/USD below the lower border of the consolidation during yesterday’s session, their opponents erased this move earlier today. Does today’s rebound suggest that we will see a post double-bottom rally? Or maybe it's just a trap for the buyers?

In our opinion the following forex trading positions are justified - summary:

• EUR/USD: none
• GBP/USD: none
• USD/JPY: long (a stop-loss order at 111.11; the initial upside target at 113.40)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Yesterday, EUR/USD dropped once again, which resulted in a decline under the lower border of the blue consolidation. Thanks to this move, the exchange rate approached three important supports: the lower line of the orange declining trend channel, the lower border of the red declining trend and the mid-August low.

Earlier today, the combination of these supports encouraged currency bulls to act, which translated into rebound that took the pair back to the interior of the blue consolidation. In this way, the buyers invalidated yesterday’s breakdown, but the pronunciation of today's move will be more positive if EUR/USD closes today's session above the lower line of the formation.

If we see such price action, currency bulls will likely try to test the upper line of the orange declining trend channel in the following days. If they manage to break above this resistance line, we’ll consider opening log positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Trading position (short-term; our opinion): None positions are justified from the risk/reward perspective.

USD/CAD

On Monday, USD/CAD extended gains and broke above the upper border of the red declining trend channel once again. This time the improvement was it was a bit more stable because the currency pair climbed above the 61.8% Fibonacci retracement during yesterday's session.

Unfortunately (for currency bulls), the sellers attacked earlier today, which resulted in an invalidation of the breakout above the retracement. Nevertheless, in our opinion, this price action will be more bearish if the pair closes today’s session under the above-mentioned resistance.

If the situation develops in line with the above scenario, the pair will likely extend losses and test the previously-broken upper border of the red declining trend channel. If we see such development, we’ll consider opening short positions. As always, we’ll keep you - our subscribers - informed should anything change.

Trading position (short-term; our opinion): None positions are justified from the risk/reward perspective, but if we see more signs of currency bulls’ weakness, we’ll consider opening short positions.

AUD/USD

In our last commentary on this currency pair, we wrote the following:

(…) currency bulls invalidated the breakdown under the early-October lows.

Yesterday, their opponents managed to invalidate the tiny breakout above the upper border of the pink declining triangle, but the buy signals generated by the indicators tempted buyers to re-fight for higher levels during today's session.

Thanks to their determination, the currency pair returned above the pink triangle, which suggests that further increases may be around the corner. If this is the case and AUD/USD extends gains from here, we’ll likely see a test of the mid-October highs or even the upper border of the red declining trend channel in the following days.

From today’s point of view, we see that the situation developed in line with the above scenario and currency bulls pushed AUD/USD higher earlier today. Thanks to this upswing, the exchange rate broke above the upper line of the yellow consolidation and approached our next upside targets.

What’s next for the pair?

Taking into account the lack of sell signals, it seems that the pair will test the above-mentioned resistances. If AUD/USD breaks above these levels and there will be no pro-declining technical factors, we will consider opening long positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Trading position (short-term; our opinion): None positions are justified from the risk/reward perspective.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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